Senate Republicans are poised to debate and pass legislation that would direct the Trump windfall back to Kansas taxpayers, but they’ll likely face resistance from the executive branch. The Senate Tax Committee discussed the legislation on Thursday.
The Trump windfall, as it’s come to be known, has given many states tens or hundreds of millions in extra tax revenue because changes in the Tax Credit and Jobs Act caused many taxpayers to pay higher state income tax.
Michael Austin hasn’t told his young son that one of his favorite neighbors is moving to Florida. Austin, director for the Sandlian Center for Entrepreneurial Government at the Kansas Policy Institute, told the committee that his neighbor isn’t the only one fleeing Kansas for other states.
“Kansans are leaving for better opportunities,” he told committee members, testifying in support of SB 13 on Thursday. The main component of the legislation would would allow Kansans to itemize deductions on their state taxes regardless of whether they itemized on their federal taxes. Doubling the federal standard deduction will prompt some people to use that instead of itemizing for federal purposes, but then pay higher state income taxes because current law prevents taxpayers from itemizing on their state return if they took the federal standard deduction.
Austin emphasized the importance of reducing the state tax burden, noting that Kansas is in its fourth decade of trailing the national average on job creation and economic growth. According to Austin, Kansas would have 160,000 more jobs and family income would be about $20,000 higher if the state had kept up with the nation.
“SB 13 would increase the take home pay of hard working Kansans and is a step in restoring those jobs and wage losses,” he said.
Senate Majority Leader Jim Denning, R-Overland Park, told reporters Monday that he anticipates the Senate adopting within the first few weeks of the 2019 legislative session. In her response to Gov. Laura Kelly’s State of the State Address, Senate President Susan Wagle, R-Wichita, echoed the sentiment, saying the Senate will pass a bill that allows Kansans to take full advantage of the Trump tax cut.
“We believe Kansans should be able to deduct interest on their mortgages, property taxes, and health care expenses,” she said. “The windfall from the Trump tax cuts belongs to Kansas taxpayer, not government.”
The Republican-majority Senate will likely face resistance from the executive branch, however. Kelly voted against a similar bill last year as did Lt. Gov. Lynn Rogers.
“I can’t support a multimillion dollar hit to our budget,” Rogers wrote in an explanation of his 2018 vote. “I don’t know how anyone can convince themselves this benefits low income or even middle income Kansans.”
Kelly and Rogers were on the losing end of a 21-19 vote, but the 2018 legislation died on a tie vote in the House on the final day of the 2018 session.
On Thursday, the Senate committee stopped short of working the 2019 legislation, in part, because legislative research hadn’t yet provided a fiscal note. Last year’s estimate suggested a similar bill would put $194 million back into taxpayer pockets over a three-year period.
Caryn Tyson, a Parker Republican who chairs the Senate Tax committee, said there are still a lot of numbers floating around as to the impact of the Trump windfall. Discussion about the bill will continue on Jan.22 when the tax committee next meets.
“It is not a tax cut,” she said. “It is stopping a tax increase.”